MANILA, PHILIPPINES - Stock exchanges in the Association of Southeast Asian Nations (ASEAN) have agreed on a regional mechanism that will route orders from brokers directly to the local exchanges, says the Asian Development Bank (ADB).

The ASEAN Common Exchange Gateway alliance is expected to help pave the way for the future development of back-end linkages involving clearing, settlement, and depositary arrangements, says ADB, which has provided technical assistance and worked closely with regional stock exchanges and regulators to develop the system.

The ultimate objective is to link ASEAN capital markets by way of a single access point for investors and issuers to any of the exchanges, says ADB.

The agreement will initially involve five countries, each of which will list their top 30 stocks on a single computer screen, known as the ASEAN Bulletin Board. The five countries are Indonesia, Malaysia, Philippines, Singapore, and Thailand. Other countries are expected to join later.

"This initiative will create the market infrastructure and regionally focused products and intermediaries to promote ASEAN as an asset class and allow distribution of listed products on ASEAN exchanges. None of the ASEAN exchanges is individually large, but together they will have the scale and liquidity to be globally competitive," says Jaseem Ahmed, Director, Financial Sector and Public Management Division in ADB's Southeast Asia Department.

The new alliance comes three weeks after ASEAN capital markets regulators agreed on a road map to fully integrate ASEAN capital markets by 2015. ADB has been helping regulators develop the integration plan by providing policy and technical support through the ASEAN Capital Markets Forum.

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